THE Bank of New York is to establish a European headquarters for private client services in Liverpool, in a move that could generate hundreds of new jobs.

The Bank of New York, one of the world's oldest and biggest financial institutions, will create a headquarters by taking over part of Pier Head-based investment firm Tilney Investment Management's existing back office operations.

One hundred staff will transfer to the Bank of New York immediately, and another 100 jobs will be created shortly afterwards.

The back office services to be transferred include share-dealing settlement, accounting services and record-keeping.

The plan is to build the business by selling the same services to other stockbroking firms around Europe.

Further expansion will depend on the amount of business drummed up and it is expected to be substantial.

The move to Liverpool is seen as hugely symbolic as the global financial services industry seeks to become more efficient and reduce costs by moving out of expensive office premises in places like the City of London, Paris and Frankfurt.

The Bank of New York is already the second largest player in the US market.

City council leader Mike Storey said last night: "To have a leading institution like the Bank of New York come to Liverpool is a massive vote of confidence in the city."

The announcement follows news that Coutts, the Queen's bank, is to open a branch in Liverpool.

The Bank of New York specialises in settling and holding accounts on behalf of the private clients of stockbroking and fund management firms - an area of expertise with massive growth potential in the UK and Europe.

The chief operating officer with Tilney Investment Management at the Royal Liver Building, John Norbury, said: "This is a tremendous shot-in-the-arm for Liverpool as a financial services centre. One of the world's most prestigious banks has decided this is where they want to locate their business, in a move which has great benefits for us too."

The Bank of New York, more than 200 years old with assets of $76bn, has been scouring the UK for a centre from which to establish a European operation offering facilities to firms with private clients.

In another field of investment securities expertise, working on behalf of merchant banks, the American bank created 4,000 jobs in Brussels in five years.

The advantage Liverpool held over other centres is the pioneering software system already in place at Tilney, the expertise of staff and the costs of running the operation compared with the City of London.

Tilney deals with between 500 and 1,000 stock market deals a day and, under the terms of the deal, the settling up and accounting part of the transaction will be given to the US bank.

Executive chairman of Tilney, David Campbell, added: "This arrangement ensures that we will continue to benefit from a first-class support infrastructure.

"Working with a recognised global leader in securities outsourcing is the best way of securing future operating efficiencies."

Bank of New York's UK vice-president, Andy Sloan, added: "Liverpool will be our operations centre for the private client market and we see exceptional growth potential."

Executives from New York have made several visits to the city in recent months to ensure it is the right place to do business. According to their hosts, the managers have been delighted with what they have found.

Bank of New York was founded in 1774 by Alexander Hamilton, first secretary to the Treasury under George Washington, and is the United States' oldest bank. Its address is One Wall Street and now also the Royal Liver Building.

It is thought that the bank will attempt to build up a client base in the UK and then expand across Europe.